Exporting Corruption 2018

The Project On Government Oversight (POGO) was honored to contribute to the report as the United States country expert. We used our 37 years of experience investigating government and corporate corruption to help compile enforcement data and propose recommendations for reform.

TI’s latest progress report tracked developments in 41 OECD member countries—and non-member countries China, Hong Kong, India, and Singapore—from 2014 to 2017. It found that only seven countries, including the United States, are actively investigating and prosecuting companies and individuals who bribe foreign officials in order to obtain contracts, licenses, and other government concessions. Four countries are ranked as having moderate enforcement of cross-border corruption, while 11 are graded as having limited enforcement. An astounding 22 countries (including China, Hong Kong, India, and Singapore) fall into the lowest category: these countries—which account for more than 40 percent of world exports—are doing little or nothing to ensure a corruption-free environment for global commerce.

Overall, TI found only marginal international progress since its last report in 2015. Improvement in eight countries was largely offset by decline in four other countries. Most countries still have deficiencies that impede enforcement, such as enforcement agencies lacking the necessary skills and resources, and weak whistleblower protections.

Bribery of public officials undermines development, distorts markets, and erodes the rule of law.

TI and POGO found the U.S. has remained virtually unchanged since 2015 in terms of its commitment to the OECD Convention and stamping out foreign bribery. It continues to lead the OECD signatory countries in enforcing the Convention, landing at the top of the “Active Enforcement” category. Between 2014 and 2017, the U.S. levied billions of dollars in penalties on, and obtained guilty pleas from, companies and individuals in 98 foreign bribery cases. Notable cases resolved during this period involved BNY Mellon, Hitachi, Teva Pharmaceutical Industries, and Rolls-Royce.

The report credits the U.S. with having two relatively strong, effective, and transparent enforcement agencies—the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC)—and well-maintained public websites that provide a free trove of useful enforcement-related information. The change in presidential administrations in 2017 did not bring about a noticeable change in U.S. enforcement of its key weapon against foreign bribery, the Foreign Corrupt Practices Act (FCPA).

The report also highlights weaknesses in the U.S. enforcement system. First, the increasing tendency of enforcement authorities to enter into international bribery settlements with the aim of minimizing damage to the company may undermine deterrence. As the report warns, the deterrent effect of settlements is “questionable” if they “do not provide effective, proportionate and dissuasive sanctions.”

The U.S. has remained virtually unchanged since 2015 in terms of its commitment to stamping out foreign bribery.

Second, transparency could be improved in certain areas. While the U.S. publicly discloses a great deal of information about resolved cases, it lacks a centralized public repository of information about open and pending investigations and cases. Additionally, when a company reports possible FCPA violations to the DOJ and/or SEC and the agencies decline to bring an enforcement action, neither agency publicly releases the facts the company disclosed and the reasons why no enforcement action was taken. The U.S. also does not report statistics regarding mutual legal assistance—instances when the U.S. seeks help from, or provides help to, other countries in corruption cases—although the report notes that “very few countries publish any data on mutual legal assistance.”

The apparent standstill in worldwide enforcement of the OECD Convention means the goal of creating a level playing field for global trade is still far from being achieved. Foreign bribery and related money-laundering offenses remain widespread problems that raise serious ethical and political concerns.

Fortunately, Exporting Corruption 2018 also suggests ways governments can improve their enforcement systems. It makes numerous recommendations for strengthening transparency, accountability, and due process, and for enhancing mutual legal assistance.